Fonterra’s been happily ‘feedlot farming’ indoors in China for nearly three years, and raising their calves in cages. Um, so remind me again … what was it they said, last December, about the ‘cubicle’ farms?

In December 2009, when the ‘cubicle cow’ story broke, Fonterra kept its distance. They said they had real concerns about the effect ‘stall’ (aka ‘cubicle’ and ‘covered’) farming could have on their pasture-fed free-range brand.

It describes an operation of around 3,000 cows. The farm is a “feedlot system”. The animals are housed in “a series of long blue barns”, atop dry compost bedding. Feed is bought in, from local farmers. “Unlike some feedlot designs that have outdoor pens, the animals are housed in the barns all the time.” And, “Calves are initially reared in individual cages before being moved into larger pens.”

The farm has been a success. Fonterra is expanding, into other Chinese farms.

The farms in China make milk for China, not the global market. The Chinese are, presumably, happy: the Fonterra partnership promises a better-quality milk deal than might otherwise be the case for them.

There’s some talk of the Chinese climate: “Temperatures can go well below freezing in the winter and climb into the mid 30s in the summer. Heat stress can be highly detrimental to milk production so good ventilation and a system of fans and sprinklers are used in the barns.”

The New Zealand proposals are, likewise, a response to weather conditions in parts of New Zealand: the extreme Mackenzie country climate, and high rainfall in Southland. (Southland proposals, as far as I know to date, are for short-term winter housing.)

Let’s try to unpack Mr Deane’s comments, a little bit.

Might the concern have been stalls or “stall-based farming”, specifically, as opposed to the Chinese “feedlot” barns? The New Zealand applicants have said that, while individual stalls would available to the cows, it is still a form of loose housing. The animals would be free to move around, within the confines of the barn. Unlike the Chinese calves, who start life in cages. (The cages are said to “give greater flexibility” — for example because they could be moved to a different location, if there was an outbreak of disease. Passive voice.)

Mr Deane’s quite right. There are concerns about the “environmental sustainability of stall-based farming”, and NZ Dairy’s stealthy creep towards more industrialised systems, that ‘externalise’ their footprint. It really is a most excellent point. It’s just, um … not quite clear, shall we say, whether and how Fonterra’s Chinese system is any more environmentally sustainable than what had been proposed in New Zealand.

“New Zealand had been showcased as an example of a country using free-range systems by the World SPCA,” said Deane. Meanwhile, out back of the shop, Fonterra was busy washing its hands.

And so, to the all-important brand. Deane was worried about our pasture-fed free-range milk, and its image, being tainted by association. They’d be unable to refuse or separate the milk. Poor perceptions of it might taint the rest.

That's milk ex-New Zealand. But when the word leaks out, to those 'enlightened' non-Chinese markets, in Europe or the States let's say, that Fonterra, too — global face of NZ Dairy — farms in barns (or stalls, or cubicles, or whatever), albeit in China for China, what then? Same risk? When they hear about the calves — and there’s growing consciousness and concern about veal calves, raised in cages — what should a middle-class conscience think?

And what are we to think? What does Fonterra actually think, when it’s not quite so busy, pandering to domestic prejudices? Anything wrong with a little bit of moral relativism, and expedience?

Comments (5)

It is a bit scary. NZ experience of globalised local corporations is not that they import best practice, but rather most parsimonious practice. It was the most technologically and commercially literate NZ fishing companies, for example, that pioneered the use of foreign 'slave' crews, a practice we may be pretty certain still continues - both Labour and National having cried "I see no ships" at it. So, if Fonterra continues their experiment in China, their next trick will be to extend the practice to New Zealand. Probably with the inclusion of Chinese guest workers - NZ after all requires that kind of expertise.

Better Fonterra should divest itself of those enterprises, and buy, maybe, Crafar farms. But they are a multinational now, it is absurd to expect them to respect local norms or preferences.

The dairy farm model Fonterra has adopted and their plans for expansion in China is almost identical to that proposed by Southdown et al in the Mackenzie Basin. The cows are proposed to be housed in loose stall barns in the same manner.

Fonterra are expounding widely the benefits of this farming system in China and we understand are exporting NZ heifers for their new expanded dairy farm of 3,000 cows at a cost of $42m (reported)

To expound the benefits of this farming system in China and decry it it NZ smacks of hypocracy. Fonterra are picking up milk from stabled cows in NZ and are happy to do so.

The Mackenzie Basin has a similar climate to that in China. Very cold winter temperature and very high summer temperature. The soils warm quickly in the spring and the grass growth under irrigation is prolific and grazing of dairy cows at 3.5 per hectare cannot control the surplus feed. The surplus is cut and stored as balage, hay and silage for winter feed

The stabling of cows is coming to NZ and such system provides the following real advantages;

1] Better animal welfare with no need to induce cows - ask the experienced vets looking after stabled cows already in NZ. Ask MAF who have viewed the existing operations in South Canterbury and Southland

2] Better production - twice as much milk achievable as the cows lead a very relaxed life and are never stressed.

3] Less feed requirement - cows in stables eat 40% less grass as the climate is controlled and benign. Instead of cows burning energy walking for up to 4 hrs each day in at times, very hot or very cold wet weather they can focus on eating and producing milk.

4] Better utilisation of infrastructure - cows calve throughout the year and as a consequence an even flow of milk production can be established and maintained - how many months a year do Fonterra have surplus capacity at their factories. The present dairy model lacks efficiency in this regard

5] Better environmental outcomes - no urine patching to ground and excrement running into surface waterways. Effluent is scraped from stable floor by mechanical system and has solids separated from liquid with the solids stored undercover. Liquid is stored in covered (in our new model) concrete tanks and applied to ground only during the growing season when there is no risk of rain and at low rates to ensure it does not travel beyond the plant root zone.

5] Total emissions control - methane and nitrous oxide from cows in stables can be captured and recycled via the effluent containment system with the gas captured and reused as fuel to drive farming infrastructure with the surplus available for power generation. - Note: This is not rocket science - it is widely practised throughout Europe and in the USA. Power generation from methane in Holland provides approximately 30% of farmers annual income.

So here we are having this debate via Pundit.

We predict that Fonterra will be promoting this farming system in NZ within the next 5 years once they have recapitalised their balance sheet and removed the redemption risk. The capital cost of $2,500 per cow is signficant for the farmers and Fonterra don't want them distracted just yet.

Why do we make this prediction - just read the reports coming out of Fonterra about their operation in China and the benefits they are achieving. Also note the points as outlined above, all readily identifiable if you visit (google will do) the leaders of dairy farming environmental sustainability in Europe particularly Holland.

The demand for environmental sustainability and animal wefare of dairy, the opportunity to provide more milk for the increasing world population, the potential benefits of infrastructure efficiency and the requirements for control of emissions from the dairy industry all point to an alignment of the stars and the subsequent adoption of this farming practise.

In the meantime we will adopt a traditional farming regime and wait for Fonterra to catch up in NZ.